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Denote i = 1, 2, 3, ..., n, the observations in a sample of size n. Denote xik, k = 1, 2, ..., K, the
Denote i = 1, 2, 3, ..., n, the observations in a sample of size n. Denote xik, k = 1, 2, ..., K, the variables x whose values have been collected for each observation 1'. Call these the independent variables. The relationship between the independent variables and a variable y (called the dependent variable) for the it" observation is: yi = 80 + 61Xi1 + 62Xi2 + 63Xi3 + Ei where the 6s denote parameters of interest and e is a random error term. In order to keep the notation compact you rewrite the model in compact matrix notation: y,- = xiB + e,- (a) Define the 1 x K+1 vector Xi of independent variables for the generic it\" observation. (b) Define the corresponding vector 6 of parameters. (c) Define the n x 1 vectors y and e if n = 3. (d) Write down the model in full matrix form. What are the dimensions of the matrix X8
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